AmEx and JPMorgan Will Keep Sharing Marriott's Credit Card Program

By AnnaMaria Andriotis 

J.P. Morgan Chase & Co. and American Express Co. will remain credit-card issuers for the Marriott International Inc. rewards program, the hotel chain announced Tuesday.

The longstanding U.S. partnership, in which J.P. Morgan issues Marriott credit cards and American Express issues Starwood Hotels & Resorts credit cards, was in question after Marriott purchased Starwood last year and began negotiations with the issuers. One possibility in the process was merging the rewards programs down to one issuer, which would have pushed all of the roughly $60 billion spent on the hotel chain's credit cards in 2016 to one lender.

Maintaining the status quo is a win for AmEx in particular, where the Starwood program is the card issuer's second-largest co-brand program, following Delta Air Lines Inc. Some AmEx investors were nervous about the prospect of AmEx losing this relationship just as the company is showing signs of rebounding from the loss of the Costco Wholesale Corp. partnership that was taken over by Citigroup Inc. and Visa Inc. in 2016.

Starwood accounted for 5% of AmEx's world-wide loans and 2% of its billings in the second half of 2016, according to AmEx data. The Starwood program also is estimated to account for about 4% to 5% of AmEx's earnings, said Mark DeVries, an analyst at Barclays PLC.

"The uncertainty had been an overhang on AXP shares," Mr. DeVries wrote in a note Tuesday. "But the announcement today resolves that uncertainty and effectively takes the worst case scenario off the table for AXP."

Holding onto the account also helps departing AmEx Chief Executive Kenneth Chenault to leave on a relatively strong note and removes a large potential problem for Stephen Squeri, who will take over as AmEx chief in February.

AmEx and Marriott shares were up about 1%, while J.P. Morgan shares were up 0.3% in late-morning trading.

Travel co-brand programs have lost some of their cachet with consumers in recent years as banks have rolled out more generous rewards on general-purpose credit cards. Consumers can use those cards to redeem points for a variety of rewards and travel expenses as opposed to limiting them to certain hotel chains or airlines.

The programs have also become costlier for lenders to win. Hotels and airlines have gained more leverage over card issuers in negotiations in recent years following consolidations in those sectors. In a presentation earlier this year, Stephanie Linnartz, Marriott's global chief commercial officer, said that there would be "upside at contract renewals" for the hotel chain.

Marriott and Starwood hotels tend to attract different borrowers, with Starwood often skewing to more affluent travelers. Marriott said in its announcement Tuesday that it expects to introduce new co-brand cards starting in 2018 with improved benefits aimed at a mix of spenders, including affluent and small-business customers.

Write to AnnaMaria Andriotis at [e-mail]

(END) Dow Jones Newswires

December 05, 2017 12:47 ET (17:47 GMT)

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